Exhibit 10.12
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("Agreement") made as of the 12th day of October,
2000, by and between AMERICAN MICROWAVE TECHNOLOGY, INC., a California
corporation (hereinafter called "Seller") and HERLEY INDUSTRIES, INC., a
Delaware corporation (hereinafter called "Buyer").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of manufacturing and selling
radio frequency power amplifiers and desires to sell to Buyer its business unit
commonly referred to as medical /scientific unit ("Business Unit") and
substantially all of the Business Unit assets, as herein provided, and Buyer
desires to purchase the Business Unit and assets, all at the price and on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual representations,
covenants and warranties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE 1.
1.1 Purchase and Sale of Assets. Subject to the terms and conditions hereof
and based upon the representations, warranties, covenants and agreements of the
parties hereafter set forth, Buyer hereby agrees to purchase and accept from
Seller, and Seller agrees to sell, assign, transfer and convey to Buyer on the
Closing Date (as hereinafter defined) except as otherwise set forth in Section
1.2 below and the Exhibits attached hereto, all of the assets used in or related
to the Business Unit, including without limitation, all of the Business Unit
related tangible and intangible assets, rights, interests and properties of
every kind and nature, wherever located and by whomever possessed, owned by
Seller as of the date hereof (together with any proceeds thereof or any payment
thereon which may be received by Seller subsequent to the date hereof), except
as otherwise specifically stated herein, free and clear of all security
interests, liens and encumbrances, including, without limitation, the following:
(a) All Business Unit related real property, machinery and other
equipment, telephone systems, vehicles, furniture, fixtures, computers and
computer software and fixed assets of Seller of any kind whatsoever,
including without limitation those Business Unit related assets reflected
on the pro forma Balance Sheet of Seller ("Balance Sheet") which reflects
only Business Unit related assets as described on Exhibit "A" attached
hereto.
(b) All catalogues, shipping and office supplies, books of account and
other financial records necessary to or useful in the continued operation
of the Business Unit, customer lists and vendor lists, Business Unit
customer backlogs, telephone numbers and telephone directory listings, the
name AMT and any variation thereof, Business Unit patents, copyrights,
licenses and rights listed in Exhibit "B" attached hereto, all rights under
any Business Unit contracts subject to consents required for assignment of
government contracts, licenses and permits, the Business Unit of Seller as
an operating business, and all Business Unit related intangible assets of
Seller of any kind whatsoever.
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(c) All other Business Unit related assets, property and rights of
Seller of any kind whatsoever, including, but not limited to, tax refunds,
accounts receivable and prepaid expenses.
(d) All Business Unit related inventories of supplies, merchandise,
packaging and promotional materials including raw material, works in
process and finished goods as attached in Exhibit H.
(e) All Business Unit related intellectual property rights.
The assets, property and rights to be transferred to Buyer by Seller
hereunder on the Closing Date are hereafter sometimes called the "Assets".
Notwithstanding the foregoing, it is expressly agreed that Seller shall be
entitled to use the name American Microwave Technology but not the name AMT in
connection with the assets and liabilities it retains.
1.2 Excluded Assets. The assets listed on Exhibit "E" are not Assets and
are excluded from the purchase contemplated by this Agreement.
ARTICLE 2.
2.1 Payment of Purchase Price and Assumption of Liabilities. Subject to the
terms and conditions set forth in this Agreement, Buyer shall, in full
consideration of the Assets to be sold and assigned to Buyer:
(a) Pay to Seller or as otherwise directed by Seller the sum of Five
Million, Four Hundred Thousand Dollars ($5,400,000) by cashier's check,
bank check or wire transfer on the Closing Date.
(b) On the Closing Date, assume the following liabilities of Seller
and no others:
(i) Accounts payable as set forth in the attached Exhibit "C",
the aggregate of which shall not exceed $800,000.
(ii) Equipment lease obligations as set forth in the attached
Exhibit "D", the aggregate of which shall not exceed $200,000.
(iii) All liabilities set forth in Exhibit "A" in an amount not
to exceed $1,153,191.
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The liabilities and obligations to be assumed and referred to in (i)
through (iii) above are hereinafter termed the "Assumed Liabilities". Except as
expressly set forth in this Agreement, no liabilities or obligations of Seller
shall be assumed by Buyer.
(c) Any provision of this Agreement to the contrary notwithstanding,
Buyer will not and does not assume the following liabilities and
obligations of Seller even if, to any extent, they were reflected in the
Financials set forth at Exhibit "F" and arose in connection with, were
incurred by or were related to the operation of the Business Unit:
(i) liabilities or obligations of Seller to any officer, director
or stockholder of the Seller, whether or not owed to such person in
his capacity as such, any person affiliated with any of the foregoing
or any person related to or sharing a household with any of the
foregoing except liabilities for accrued wages and salaries reflected
in the Balance Sheet.
(ii) expenses incurred by the Seller in connection with the
transactions contemplated herein, including, without limitation, fees
and expenses of Seller's finder's fees to Decisionpoint, counsel and
accountants.
(iii) any obligation or liability of the Seller to the Buyer.
(iv) any foreign, federal, state or local tax based on income or
revenues or interest or penalties relating thereto, whether arising by
reason of the sale of the Assets as herein provided or by reason of
the existence or operations of the Seller prior to or after the date
hereof and any sales or use taxes incurred by Seller on or prior to
the Closing.
(v) to the extent not paid for under existing insurance policies
assigned to Buyer hereunder, workman's compensation claims against
Seller based on occurrences prior to the Closing Date.
(vi) to the extent not paid for under existing insurance policies
assigned to Buyer hereunder, liabilities to third parties for tort and
product liability claims made against Seller prior to the Closing Date
based upon occurrences prior to the Closing Date.
(vii) all obligations of Seller incurred after the date hereof
other than those incurred in the ordinary course of business.
(viii) all other liabilities or obligations of Seller to the
extent any of such liabilities or obligations constitute a breach of
the representations or warranties of Seller set forth in Article 3
hereof.
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(ix) obligations or liabilities of Seller with respect to any
employee option or benefit plan including, without limitation, any
underfunding or termination liability.
(x) liabilities or obligations of Seller in connection with its
failure to obtain, its failure to maintain in full force and effect or
its default under any approval, authorization, consent, certificate of
occupancy (or local equivalent), license, franchise, order or other
permit of any governmental or regulatory agency, whether federal,
state, local or foreign necessary to the operation of Seller's
business as presently conducted including, without limitation, the
construction, alteration, operation, use or occupancy of the premises
occupied by Seller, or any improvements thereon.
(xi) except to the extent provided in Section 2.1(c)(i) above or
as otherwise expressly provided herein or in any other document
executed in connection herewith, any liabilities to employees or
former employees of the Seller, and their beneficiaries, whether
pursuant to agreement or otherwise, including those for salaries,
bonus and employment benefits, fringe benefits, insurance, welfare,
post retirement medical, medical reimbursement, deferred compensation,
sick pay, termination, severance, stock option, stock purchase,
accident, disability, vacation, health, medical and worker's
compensation insurance or benefits.
(xii) any and all environmental liabilities arising out of or
resulting from any or all of the following conditions, which
hereinafter are collectively referred to as the "pre-closing liability
conditions": (A) the existence prior to the Closing Date of hazardous
materials upon, within or beneath any of the real property, or
migrating from such real property; (B) any violations of environmental
requirements premised upon, or arising out of any of the conditions
described in (A) above; (C) any violations of environmental
requirements pertaining to the use or operation of the real property
or any other of the Assets prior to the Closing Date, or the conduct
of operation of the business of the Seller prior to the Closing Date;
and (D) the existence of any underground storage tank (USTs) at the
real property.
(xiii) any other liabilities or obligations of Seller which are
not expressly assumed hereunder.
Notwithstanding the foregoing, Seller shall not have any liability or
responsibility whatsoever arising in any way from actions or inactions of Buyer
relative to the Assumed Liabilities, Assets or the Business Unit purchased by
Buyer hereunder after the Closing to the extent Buyer's actions impair the
Assets or Business Unit.
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ARTICLE 3.
3.1 Representations and Warranties of Seller. Seller represents, warrants
and covenants as follows:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Seller is not
required by reason of its present ownership of property or present
operations to be qualified to do business in any other state. Seller does
not have any subsidiaries.
(b) Seller has corporate power to enter into and carry out this
Agreement and related documents, has no contractual or other restriction
upon its so doing and has properly secured the approval of this Agreement
by its Board of Directors and stockholders; and Seller's executing officers
are authorized thereby to execute this Agreement, and such other documents
as may be necessary to consummate the transaction contemplated herein. The
Agreement and related documents to which Seller is a party executed on the
Closing Date will be valid and binding agreements of Seller, enforceable
against Seller in accordance with their terms.
(c) Attached hereto as Exhibit "F" are copies of the unaudited
financial statements of Seller for the year ended December 31, 1999 and
unaudited financial statements for the period ended August 26, 2000,
including the balance sheet of the Seller as at August 26, 2000, and
statement of operations and retained earnings, and. changes of cash flows
of the Seller, with appended notes to all such financial statements, which
are an integral part of such statements (collectively the "Financials").
The Financials have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis and present fairly the
financial position and results of operations of Seller at the dates and for
the periods specified.
(d) There has been no material change in the financial condition,
assets or liabilities of Seller as they relate to the Business Unit and the
Assets from August 26, 2000 to the date hereof, except for changes which
have occurred in the ordinary course of business, none of which have been
materially adverse.
(e) The only real property owned by Seller are real estate leases as
described in Exhibit "G" attached hereto. Aside from Exhibit "G", the
Seller neither owns nor has interest in or rights to any real estate.
(f) Exhibit "A", attached hereto, includes a true and correct list of
all fixed assets owned by Seller used in the Business Unit and a schedule
of all leases of fixed assets used in the Business Unit and personal
property used in the Business Unit under which Seller is lessee, all of
which leases are valid and binding and not in default, by either lessor or
lessee thereunder.
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(g) Seller has not received any notice from any governmental authority
that its real estate, or personal property within the Assets violate the
provisions of any building or similar code, nor does Seller have knowledge
of any basis for such a claim. Seller is conveying to Buyer all the
equipment and property previously required by Seller for the proper
operation of its Business Unit. Except with respect to government contracts
and governmental licenses and permits, no consent (except those which have
already been obtained) are necessary to transfer to the Buyer any of the
Assets, property or rights of the Business Unit, including any leases or
licenses of personal property or other rights.
(h) The Assets are and will be on the Closing Date owned by Seller
free and clear of any liens, encumbrances or restrictions, except as
specifically reflected in the Exhibit "J".
(i) From and after the date of this Agreement and until the Closing
Date, the Business Unit has been and will be operated in the ordinary
course consistent with past practices and there has not or will not have
been:
(i) any damage, destruction or loss, whether or not covered by
insurance, which has had, or will have, a material adverse effect on
the Business Unit;
(ii) any strike, picketing or similar labor trouble which has
had, or will have, a material adverse effect on the Business Unit;
(iii) any license, sale, transfer, mortgage or other disposition
of any Assets except in the ordinary course of business, or any
license, sale, assignment, transfer or other disposition of any
patent, copyright, trademark, license, franchise, know-how,
proprietary process, formula or other intangible asset used in the
Business Unit;
(iv) any change in the benefits or compensation payable or to
become payable to officers or employees in any form, including
bonuses, pension, severance, etc.;
(v) any loans, advances or capital contribution to or investment
in any person or entity;
(vi) any issuances or sale of any stock, bond or other corporate
security;
(vii) any material adverse change in the condition (financial or
otherwise) of the Business Unit.
(j) Seller has not received any notice from any governmental agency
with respect to any "alleged material violation" (i.e., an alleged
violation which would have a material adverse effect on the Business Unit)
by it of any applicable federal, state or local environmental or health and
safety statutes and regulations in connection with the Business Unit, nor
does Seller know of any basis for any investigation or proceeding against
it by any federal, state or local environmental or health and safety
enforcement agency regarding such a violation in connection with the
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operation of the Business Unit. To the best knowledge of Seller, neither
Seller nor any predecessor of Seller has been alleged to be in material
violation of, or has been subject to any administrative or judicial
proceeding pursuant to such environmental laws and regulations with respect
to the Business Unit, either now or at any time during the past three
years, and so far as Seller is aware, there are no such threatened or
proposed violations with respect to the Business Unit.
(k) The equipment and other personal property included within the
Assets taken as a whole, is in good operating condition in all material
respects, subject to normal wear and tear.
(l) Except as set forth in Exhibit "I ", there are no material
agreements or contracts to which the Business Unit of Seller is a party or
by which it is bound.
(m) With respect to government contracts or OEM subcontracts included
within the Assets, there are (i) no outstanding written cure notices or
show causes, (ii) any written notices of contract termination or stop work
orders, (iii) any written final decision assessing a penalty or damages,
(iv) any written assertion of a formal claim based on violation of
government cost accounting standards or government pricing, or (v) any
formal notice of proposed disallowance of indirect cost claims, any
subpoena or written notice signifying government investigation.
(n) Seller is not aware of any fact or circumstance which would have
an adverse effect on the efforts of Seller and Buyer to obtain novation
agreements and to otherwise obtain all required consents.
(o) Seller is not in default or breach with respect to any material
obligation under any of its vendor, supplier or customer contracts,
including the government contracts relative to the Assets.
(p) All inventory within the Assets reflected on the balance sheet at
August 26, 2000 is, and on the Closing Date will be, of usable quality,
except as may be otherwise reserved for and reflected on the Seller's
financial statements.
(q) Seller has never had any labor trouble, by which is meant employee
strikes, work stoppages, slow downs or lock outs, or any threats thereof.
None of Seller's employees has ever been covered by a collective bargaining
agreement between Seller and any labor union.
(r) Exhibit "B", attached hereto contains a complete listing of all
patents, licenses, trademarks, trade names, brand names, copyrights, logos,
inventions, trade secrets, and other proprietary information used or
required by Seller in connection with the carrying on and conduct of its
Business Unit, none of which, to the best knowledge of Seller, infringes
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the rights of others. Seller is the sole owner of or has the exclusive
right to use, for the life of the proprietary rights, all patents,
trademarks, service marks, tradenames, copyrights, inventions, logos, trade
secrets, etc. used in the Business Unit.
(s) Seller has timely and properly filed all federal, state and other
tax returns and reports, statements and other documents which it is or has
been required to file, and has paid all taxes, including interest and
penalties, if any, which have become due pursuant to tax returns and
reports filed and pursuant to assessments received by it. Seller has, to
the date hereof, properly accrued, and will pay when due, all federal,
state and other tax liabilities of Seller.
(t) To the best of its knowledge, Seller has complied in all material
respects with all laws, rules, regulations, ordinances, judgments, decrees
and orders of federal, state and local authorities and agencies applicable
to its Business Unit, the violation of which could result in liability to
Seller of $2,000 or more. Seller has substantially complied with all
requirements under necessary permits, authorizations, or licenses and has,
as of the date hereof, secured such permits, authorizations and licenses in
connection with the Assets. Notwithstanding the foregoing, Seller has fully
disclosed to Buyer the circumstances surrounding its ESOP, including the
fact that the Department of Labor has requested information about the ESOP.
(u) Except as set forth on Exhibit "K," there are no actions at law or
in equity pending or, to the best knowledge of Seller, threatened against
or adversely affecting Seller or any of the Assets, and except as set forth
on Exhibit "K," there are no proceedings pending or, to the best knowledge
of Seller, threatened against Seller by or before any governmental board,
department, commission or agency involving the Assets.
(v) None of the real property nor to the best knowledge of the Seller
any real property previously owned or leased by Seller or any of its
predecessors have been used at any time in connection with the Business
Unit: (i) as a site for the storage or disposal of waste (including,
without limitation, as that term is used in the Resource Conservation
Recovery Act (the "Conservation Act") (42 U.S.C. 901 et seq); (ii) so as to
cause a violation of or to give rise to a removal or restoration obligation
or liability for the costs of removal or restoration by others, or
liability for damages to others, under any statute, ordinance, order,
decree, or under the common law of any state, federal, municipal or other
governmental entity, body or agency having jurisdiction over any of the
real property or any such previously owned or leased property, including,
without limitation, the Comprehensive Environmental Response, Compensation
and Liability Act, as amended ("CERCLA") (42 U.S.C. 9601 et seq.), or any
similar Environmental Requirement, nor has any such violation, obligation
or liability been created by the removal by or at the request of the Seller
or, to the best knowledge of the Seller, any of its predecessors of any
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waste from the real property or such leased or previously owned or leased
properties, the disposition of such removed waste or by reason of the
discontinuance of operations of any business conducted at the real property
or the previously owned or leased properties or (iii) to the best knowledge
of the Seller, for storage of hazardous materials in USTs. Seller has
delivered to Buyer true, complete and correct copies or results of any
reports, studies or tests in the possession of or initiated by Sellers
pertaining to the existence of hazardous materials and other environmental
concerns at any part of the real property or any properties previously
owned or leased by Seller or any of its predecessors or concerning
compliance with or liability under laws relating to toxic waste and other
environmental matters in the operation of the business and properties of
the Seller or any of its predecessors.
(w) Seller has no reason to believe that the accounts receivable being
conveyed to Buyer hereunder are uncollectible.
(x) Seller is not in default, or alleged to be in default, under any
agreement, instrument or obligation, which singly or in the aggregate might
have an adverse effect on the Seller's Business Unit. There is no default
by any party with whom the Seller has an agreement which is of material
importance to the Seller's Business Unit.
(y) Except with respect to government contracts, licenses and permits
for which consent is required, there is no material asset, property or
right used or required by the Buyer in the conduct of the Business Unit
which is not being conveyed, transferred, or assigned to Buyer under this
Agreement.
(z) Except as set forth on Exhibit "L", neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, violates any provision of the articles of
incorporation or by-laws of Seller; violates or is in conflict with or
constitutes a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or results in the termination of,
or accelerates the performance required by, or excuses performance by any
person of any of its or their obligations under, or causes the acceleration
of the maturity of any debt or obligation pursuant to, or results in, the
creation or imposition of any lien or encumbrance upon any of the Assets
under any agreement or commitment to which Seller is a party or by which
any of its Assets is bound, or to which any of the Assets of the Seller is
subject; or violates any statute, law, regulation, rule, judgment or order
of any court or other governmental body.
(aa) The insurance coverage of Seller is within industry standards for
the Assets and Business Unit.
(bb) Seller has not employed any broker, finder, investment banker or
financial advisor as to whom the Seller may have an obligation to pay
monies, or incurred any liability for any brokerage fees or commissions or
for any finders' investment banking or financial advisory fees for which
the Seller may be responsible in connection with the transactions
contemplated hereby except finder's fees to Decisionpoint in the amount of
$432,000.
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(cc) No representation or warranty made in this Agreement by the
Seller, nor any statement, schedule or certificate furnished or to be
furnished to the Buyer pursuant hereto, or in connection with the
transactions contemplated hereby, contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material
fact necessary to make the statements contained herein or therein not
misleading.
ARTICLE 4.
4.1 Representations and Warranties of Buyer. Buyer represents and warrants
to Seller that:
(a) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware with corporate power
to carry on its business as now conducted. Buyer has corporate power to
enter into and carry out this Agreement, has no contractual or other
restriction upon its so doing, and has properly secured the approval of its
Board of Directors to do so, no other approval being required. Buyer's
executing officers are authorized thereby to execute this Agreement, and
such other documents as may be necessary to consummate the transactions
contemplated herein.
(b) Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, violates any
provision of the certificate of incorporation or by-laws of Buyer; violates
or is in conflict with or constitutes a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
results in the termination of, or accelerates the performance required by,
or excuses performance by any person of any of its or their obligations
under, or causes the acceleration of the maturity of any debt or obligation
pursuant to, or results in the creation or imposition of any lien or
encumbrance upon any property or assets of Buyer under any agreement or
commitment to which Buyer is a party or by which any of its property or
assets is bound, or to which any of the property or assets of the Buyer is
subject; or violates any statute, law, regulation, rule, judgment or order
of any court or other governmental body.
(c) Buyer will use all reasonable efforts to release Seller from those
liabilities which Buyer has expressly agreed to assume under this
Agreement.
(d) No representation or warranty made in this Agreement by the Buyer,
nor any statement, schedule or certificate furnished or to be furnished to
the Seller pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading.
ARTICLE 5.
5.1 Operations of Business Unit Since August 26, 2000 . Since August 26,
2000, the Seller has adhered to the following restrictions:
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(a) Seller has conducted the Business Unit in the ordinary and usual
course and has used its best efforts to maintain the Business Unit and the
goodwill thereof in accordance with its prior practice.
(b) Seller has maintained the Assets owned or leased by Seller in the
same condition as the same were on August 26, 2000, reasonable wear and
tear excepted and dispositions in the ordinary course of business, which
dispositions have not been material in the aggregate.
(c) Seller has not mortgaged, pledged or subjected to any lien or
encumbrance any of the Assets or suffered or permitted, any of the Assets
to become encumbered or subject to any lien.
(d) Seller has not made or declared any distribution, transfer or
dividend to its shareholders, or sold or disposed of, or made any offer,
agreement or contract relating to the sale or disposition of, any of the
Assets acquired by Seller since August 26 2000 (with the further exception
of those which have been disposed of in the ordinary course of business
consistent with historical practice).
(e) Except as otherwise disclosed to Buyer, Seller has not incurred or
become liable for any obligation or liability except current liabilities
incurred in the ordinary course of business consistent with historical
business practices.
(f) Seller has not made increases in employees' salaries or benefits
subsequent to August 26, 2000 except for a $150,000 termination payment to
Hans Gregory Wood which is not being paid from the Business Unit Assets.
(g) Seller has paid or accrued all operating costs since August 26,
2000, including but not limited to all wages and salaries as the same shall
have become due and payable, any premiums due on employee health insurance
and other insurance policies, utility bills, rents, all payments required
for merchandise and services received during such period, and all other
expenses of the type ordinarily and reasonably incurred by Seller's
business since August 26, 2000.
ARTICLE 6.
6.1 Conditions to Obligation of Buyer to Close. The obligation of Buyer to
purchase the Assets and otherwise to consummate the transactions that are to be
consummated at the Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions (any of which may be waived by Buyer
in whole or in part):
(a) All required consents shall have been duly obtained or obviated,
except where (i) the failure to obtain any such required consents would not
reasonably be expected to subject Buyer to any material penalty or loss,
including loss of partial revenue, or (ii) such required consent relates to
an assigned contract or a related assumed liability, as to which the
parties will proceed pursuant to Article 8.
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(b) The representations and warranties of Seller set forth in Article
3 shall be true and correct in all material respects on the Closing Date.
(c) Seller shall have complied with and performed, in all material
respects, all obligations required by this Agreement to be complied with or
performed by Seller on or before the Closing Date.
(d) Seller shall have delivered to Buyer a certificate, dated as of
the Closing Date, to the effect that the conditions set forth in Sections
(b) and (c) pursuant to this Article 6 have been satisfied.
(e) Buyer shall have entered into an employment agreement with Hans
Gregory Wood, in conformity with the form of agreement annexed hereto as
Exhibit "M".
(f) Seller shall have fully complied with the provisions of any
so-called Bulk Sales Laws applicable to the conveyance to Buyer of the
Assets.
ARTICLE 7.
7.1 Conditions to Obligation of Seller to Close. The obligation of Seller
to sell the Assets to Buyer and otherwise to consummate the transactions that
are to be consummated at the Closing is subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of which may be waived
by Seller in whole or in part):
(a) All required consents shall have been duly obtained or obviated,
except where (i) the failure to obtain any such required consents would not
reasonably be expected to subject Seller to a material penalty or loss or
(ii) such required consent relates to an assigned contract or a related
assumed liability, as to which the party will proceed pursuant to Article
8.
(b) The representations and warranties of Buyer set forth in Article 4
and the representations and warranties of Buyer set forth in the other
instruments shall be true and correct in all material respects on the
Closing Date.
(c) Buyer shall have complied with and performed, in all material
respects, all obligations required by this Agreement to be complied with or
performed by Buyer on or before the Closing Date.
(d) Buyer shall have delivered to Seller a certificate dated as of the
Closing Date, to the effect that the conditions set forth in Sections (b)
and (c) of this Article 7 above have been satisfied.
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(e) Buyer shall have entered into an Employment Agreement with Hans
Gregory Wood, in conformity with the form of agreement annexed hereto as
Exhibit "M".
ARTICLE 8.
8.1 Best Efforts to Obtain Consents.
(a) Where required, Seller and Buyer shall notify Seller's customers
and suppliers that Seller's obligations under its contracts, including
government contracts, will, after the closing, be performed by Buyer. Prior
to the Closing, Seller will use its best efforts to obtain the consents of
any parties to the contracts which require such consent to be obtained
prior to transfer of the contracts to Buyer ("Pre-closing Consents").
Seller and Buyer will cooperate and use their best reasonable efforts to
obtain (i) novation agreements to the extent required by law to each
government contract ("Novation Contracts ") as soon as reasonably possible,
(ii) any security clearances, licenses or similar permits required to
operate any facility or conduct any portion of the Business Unit, and (iii)
all other consents, approvals, novations, and waivers necessary to convey
to Buyer any of the Assets which are not required by law or by contract to
be obtained prior to the Closing Date. (All Novation Contracts and other
consents, security clearances, permits, approvals and waivers described in
(i), (ii) and (iii) above are hereinafter referred to as "Post-closing
Consents ".).
(b) To the extent that the assignment by Seller and the assumption by
Buyer of any contracts included within the Assets shall require the consent
or approval of any third party, this Agreement shall not constitute an
assignment and/or assumption thereof if such attempted assignment or
assumption would constitute a breach thereof.
(c) Until (i) any Novation Contract legally required with respect to
any government contract has been executed and delivered and (ii) Seller and
Buyer have obtained any Post-closing Consents necessary to convey to Buyer
any contract not requiring a Novation Contract pursuant to Section 1 of
this Article 8 above, Buyer on behalf of Seller, from and after the Closing
Date, shall assume and perform (as a subcontractor to Seller in the case of
government contracts) and Buyer shall assume and perform, for the benefit
of the issuer thereof or other party or parties thereto, the liabilities,
responsibilities and obligations of Seller thereunder (other than the
liabilities, responsibilities and obligations of Seller under Section (d)
of this Article 8.
(d) Until Seller and Buyer have obtained any Novation Contracts or
Post-closing Consents necessary to convey to Buyer any contracts, including
government contracts pursuant to Section (a) of this Article 8, Seller from
and after the Closing Date will (i) promptly transmit to Seller's
government contract customers, Seller's invoices based upon the invoices
submitted by Buyer to Seller pursuant to Section (e) of this Article 8,
(ii) receive payments tendered to Seller by such government contract
customers and promptly remit such payments to Buyer, (iii) enforce for the
<PAGE>
benefit of Buyer all rights of Seller under any government contract, and
(iv) take any other reasonable actions necessary to allow Buyer to perform
its obligations and derive its benefits as a subcontractor under the
government contracts.
(e) From and after the Closing Date and until the applicable
Post-closing Consents are obtained, Buyer shall take all reasonable action
necessary to allow Seller to perform its obligations under the government
contracts, including but not limited to promptly submitting invoices to
Seller for such payments or reimbursements as are appropriate in accordance
with the respective terms of such government contracts.
ARTICLE 9.
9.1 The Closing.
(a) The Closing hereunder shall take place at the offices of
McAndrews, Allen & Matson on October 12, 2000 at 9:00 a.m, (the "Closing
Date").
(b) On the Closing Date, (a) Seller shall transfer the Assets to Buyer
by good and sufficient deeds, bills of sale, assignments and other
documents and instruments of conveyance reasonably satisfactory to counsel
for Buyer; and (b) Buyer shall deliver to Seller the cash payment payable
on the Closing Date (by cashier's check or wire transfer) and duly executed
instrument or instruments reasonably satisfactory to counsel for Seller
evidencing the assumption by Buyer of the Assumed Liabilities.
(c) Seller shall furnish to Buyer, on the Closing Date, the Exhibits.
(d) Except as otherwise provided in Article 8, Seller shall have
received on or prior to the Closing Date, all required consents of third
parties to the consummation of the transactions provided for herein,
including consents to the assignment of the material contracts, leases and
agreements addressed above in Section 6.1.
(e) Seller shall furnish to Buyer on the Closing Date resolutions duly
adopted and carried by its directors authorizing the execution, delivery
and performance of this Agreement and evidence of shareholder approval of
the sale of the Business Unit certified by its secretary.
(f) Seller shall furnish to Buyer, on the Closing Date, an opinion of
counsel for Seller in form and substance reasonably satisfactory to counsel
for Buyer to the effect that:
(i) Seller is a corporation duly organized, existing and in good
standing under the laws of the State of California, with corporate
power to enter into and perform this Agreement and transfer the Assets
as provided for herein.
<PAGE>
(ii) This Agreement has been duly authorized, executed and
delivered by Seller and constitutes its legal, valid and enforceable
obligation in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally.
(iii) The carrying out of the transactions provided for herein
will not violate any charter or by law of Seller nor, to counsel's
knowledge, any corporate restriction, agreement, or arrangement to
which Seller is a party or to which it is subject.
(iv) The bills of sale and other documents of conveyance and
transfer delivered to Buyer by Seller on the Closing Date have been
duly authorized, executed and delivered by Seller and are adequate
under the laws of California to effect such conveyance and transfer.
(g) Buyer shall furnish to Seller, on the Closing Date, an opinion of
counsel for Buyer in form and substance reasonably satisfactory to counsel
for Seller to the effect that:
(i) Buyer is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with corporate power
to enter into and perform this Agreement.
(ii) This Agreement has been duly authorized, executed and
delivered by Buyer and constitutes the legal, valid and enforceable
obligation in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally.
(iii) This Agreement and the carrying out of the transactions
herein provided for will not violate any charter or to our knowledge
other corporate restrictions, agreements or arrangements to which
Buyer is subject.
ARTICLE 10.
10.1 Survival of Representations and Warranties of Seller, and
Indemnification.
(a) The representations, covenants and warranties of Seller contained
in this Agreement or any Exhibit attached hereto or any certificate
delivered pursuant hereto shall survive the Closing Date for two years.
(b) Notwithstanding any investigation of Seller or the Assets or
Business Unit which is made by or on behalf of Buyer prior to the Closing
Date, Seller shall indemnify, defend, and hold harmless Buyer against any
loss, expense (including reasonable cost of investigation and legal fees),
<PAGE>
or other damage resulting from (i) any material breach by Seller of any of
their warranties, representations or agreements contained herein, (ii) any
action or claim which is brought or asserted by third parties against Buyer
or any successor arising out of the conduct of Seller (except the Assumed
Liabilities expressly assumed by Buyer pursuant to Article 2 hereof) or on
account of the non-compliance by Buyer with the provisions of any so-called
Bulk Sales Law applicable to the conveyance to Buyer of the Assets, (iii)
any failure by Seller to perform any covenant, undertaking or obligation
hereunder, or (iv) any liability arising as a result of any of the
proceedings listed on Exhibit "K"; to the extent any such claim or claims
exceed in the aggregate $50,000.
(c) If any action or claim shall be brought or asserted against Buyer
or any successor in respect of which indemnity may be sought from Seller
pursuant to paragraph 10.1 (b) of this Article 10, Buyer shall timely
notify Seller and Seller shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to Buyer, and the payment of
all expenses. Buyer shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fee and
expenses of such counsel shall be at the expense of Buyer unless (i) the
employment thereof shall have been specifically directed by Seller, or (ii)
Seller shall have elected not to assume the defense and employ counsel. For
the purpose of this section, notice given within thirty (30) days after the
occurrence giving rise to the right of indemnification shall be "timely"
but notice given later than such thirty (30) days shall not terminate a
party's right to indemnification unless the party receiving such notice can
demonstrate that its rights have been adversely affected in a material
fashion by such allegedly untimely notice.
(d) The indemnity liability of the Seller herein shall not exceed the
amount of the purchase price to be paid by Buyer under Article 2 hereof.
10.2 Survival of Representations and Warranties of Buyer, and
Indemnification.
(a) The representations and warranties of Buyer contained in this
Agreement or any Exhibit attached hereto or any certificate delivered
pursuant hereto shall survive the Closing Date for two years.
(b) Notwithstanding any investigation of Buyer which is made by or on
behalf of Seller prior to the Closing Date, Buyer shall indemnify, defend,
and hold harmless Seller against any loss, expense (including reasonable
cost of investigation and legal fees), or other damage resulting from (i)
any breach by Buyer of any of its warranties, representations or agreements
contained herein, (ii) any failure by Buyer to perform any covenant,
undertaking or obligation hereunder, or (iii) any action or claim brought
or asserted, by third parties against Seller which relates to the Assets or
the conduct of the Business Unit by Buyer after the Closing Date; to the
extent any such claim or claims exceed in the aggregate $50,000.
<PAGE>
(c) If any action or claim shall be brought or asserted against Seller
or any successor in respect of which indemnity may be sought from Buyer
pursuant to paragraph 10.2(b) of this Article 10. Seller shall timely
notify Buyer and Buyer shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to Seller, and the payment of
all expenses. Seller shall have the right to employ separate counsel in any
such action and participate in the defense thereof, but the fee and
expenses of such counsel shall be at the expense of Seller unless (i) the
employment thereof shall have been specifically directed by Buyer, or (ii)
Buyer shall have elected not to assume the defense and employ counsel. For
the purpose of this section, notice given within thirty (30) days after the
occurrence giving rise to the right of indemnification shall be "timely"
but notice given later than such thirty (30) days shall not terminate a
party's right to indemnification unless the party receiving such notice can
demonstrate that its rights have been adversely affected in a material
fashion by such allegedly untimely notice.
ARTICLE 11
11.1 Covenants and Agreements Pertaining to the Period Subsequent to
Closing.
(a) After the Closing:
(i) Seller shall indemnify Buyer from, and use its best efforts
to promptly discharge or cause to be discharged as they become due,
all debts, obligations and liabilities of Seller other than the
Assumed Liabilities
(ii) Buyer shall indemnify Seller from, and promptly discharge,
or cause to be discharged as they become due, the Assumed Liabilities
and those liabilities arising out of the conduct of the Business Unit
by Buyer after the Closing Date.
(b) Upon the request of either Buyer or Seller, the other party will
execute and deliver to the requesting party all such instruments and
documents of further assurance or otherwise, and will do any and all such
acts and things as may reasonably be required to carry out the obligations
of such party hereunder and to consummate the transactions contemplated
hereby.
(c) Seller and its representatives shall, upon reasonable notice and
at reasonable times, have access to Seller's records which have been left
in the possession of Buyer for the purpose of winding up its affairs and
filing and paying its tax obligations.
(d) From and after the date hereof, the Seller and its officers and
directors will, and Seller will cause its officers and directors to, hold
in a fiduciary capacity for the benefit of Buyer all confidential
information, knowledge, and data relating to or concerned with the Business
<PAGE>
Unit and shall not divulge, and shall cause such officers and directors not
to divulge, any such confidential information, knowledge, or data to any
person, firm or corporation other than Buyer.
(e) Buyer will not assign, transfer or convey the Business Unit to any
third party without requiring such third party to assume the obligations of
Buyer hereunder. Such assignment, transfer or conveyance will not release
or modify any of the obligations of Buyer under this Agreement.
(f) Buyer will be entitled, for a period of five (5) months after the
Closing, to use Seller's leased premises in Anaheim, California without
additional cost to Buyer. Should Buyer continue to use or otherwise occupy
such premises after the five (5) month period, Buyer shall pay to Seller
$12,500 per month, and pro rated for any portion of a month.
ARTICLE 12.
12.1 Miscellaneous.
(a) Any notices, approvals or other communications provided for herein
to be given hereunder by any party to another shall be deemed validly and
properly given or made if in writing and delivered personally or sent by
overnight or certified mail, return receipt requested, postage prepaid, as
follows:
If to Seller: American Microwave Technology, Inc.
c/o Edgewater Private Equity Fund II, LP
2 Corporate Plaza
Newport Beach, CA 92660
Attention: Robert G. Allison
With a copy to: McAndrews Allen & Matson
1301 Dove Street, Ste. 1020
Newport Beach, CA 92660
Attention: Stephanie E. Allen, Esq.
If to Buyer: Herley Industries, Inc.
10 Industry Drive
Lancaster, Pennsylvania 17603
Attention: Mr. Lee N. Blatt, Chairman of the Board
With a copy to: Blau, Kramer, Wactlar, & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
Attention: David H. Lieberman, Esq.
<PAGE>
Either of the parties hereto may give notice to the other at any time by
the methods specified above of a change in the address at which, or the persons
to whom, notices addressed to it are to be delivered in the future, and such
notice shall be deemed to amend this paragraph until superseded by a later
notice of the same type. Any notice given by mail as aforesaid shall be
conclusively deemed to have been received by a party hereto and be effective on
the third business day after the day on which mailed to the address set forth
above.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
(b) This Agreement may be executed in one or more counterparts, each
of which shall constitute an original hereof.
(c) This Agreement may be modified, amended or supplemented only by
mutual written agreement of the Seller and the Buyer. Each amendment,
modification or supplement shall be in writing signed by the party or
parties to be charged.
(d) This Agreement, the Exhibits hereto and the other documents
delivered hereto constitute the entire agreement of the parties in respect
of the subject matter hereof and supersedes all prior statements or
agreements among the parties in respect of such subject matter.
(e) Article headings used in this Agreement are for convenience only
and shall not affect the construction of this Agreement.
(f) Whenever in this Agreement it is provided that a party hereto
shall deliver an agreement or other instrument to the other of them, such
agreement or instrument shall be in form reasonably satisfactory to counsel
for the party to which-the same is to be delivered.
(g) In the event of litigation to enforce this Agreement, the
prevailing party shall receive an award of reasonable attorney's fees and
costs.
(h) This Agreement shall be construed and interpreted according to the
laws of the State of Delaware without regard to its conflicts of laws
provisions.
[SIGNATURES ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their duly authorized officers and their corporate seals to be
affixed and attested by their respective Secretaries as of the day, month and
year first above written.
AMERICAN MICROWAVE TECHNOLOGY, INC.
By: /s/ James P. Burra
------------------------------------
James P. Burra
Interim Chairman of the Board
HERLEY INDUSTRIES, INC.
By: /s/ Myron Levy
------------------------------------
Myron Levy
President
